Weekly Roundup: Trade, Wars, and Trade-wars
The U.S. continues dizzying and contradictory trade policies, crypto notches wins, and censorship is in the eye of the beholder.
Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.
On February 24, 2022, Russia escalated its war of aggression against Ukraine by beginning its full-scale invasion of the democratic country. The resistance of the Ukrainians in the face of authoritarian violence has been full-throated and inspiring. Unfortunately, the support of the United States looks like it won’t just wane but do a 180. For those looking to support the survival and success of a free and sovereign Ukraine, Razom is a good place to start. I’ve spent lots of time in the country since the start of the full-scale invasion, so if you have a particular sector you want to impact to support Ukraine, please DM me, and I can point you in the right direction.
Some techno-policy news from Ukraine:
DEEP DIVE: Ukraine’s decentralized 3D-printing war goods industry. “3D printing is greatly expanding Ukraine’s production capacity, enabling the rapid manufacturing of drone munitions and shells – all growing Ukraine’s lethal abilities.”
Mobilization challenges worry miltech staff. “To exempt Ukrainian employees from mobilization, all manufacturers should have active governmental contracts. There are only ten days left, until February 28, to pass a new evaluation process.”
DEEP DIVE: Taiwan miltech aims to undermine Chinese components. “Taiwan is building its own nascent miltech industry – and making exchanges with Ukrainian counterparts. The Ukraine war has brought urgency to Taiwan’s desire to serve as the alternative to the ‘red supply chain,’ opening a defense component alternative for the democratic world.”
The trade wars
President Trump issued an Executive Order to prevent countries from “increasingly [exerting] extraterritorial authority over American companies, particularly in the technology sector, hindering these companies’ success and appropriating revenues that should contribute to our Nation’s well-being, not theirs.” The WSJ reports:
The memo directs the U.S. Trade Representative’s office to renew tariff investigations started during Trump’s first term on countries that impose digital services taxes, according to a fact sheet provided by the administration. Those countries include certain European Union member nations, as well as Canada, India and others.
The idea, I believe, is that the US can use its tariff power to force other countries to lower their tax rate & regulatory burden on American tech companies.1 If these tariffs are implemented, they will contribute to a massive trade backfire that is already in the making from earlier administration policies. My friends in the international trade business are telling me people are already finding and securing trading partners to replace the US. Another second order effect of an order like this: The Trump administration is setting up an environment that could lead the EU to become a technology powerhouse in its own right.2
EU defense VC spending is up and unlikely to decrease due to the clear US policy choices that will force Europe to fend for itself.
Tariff responses could be to do nothing and call Trump's bluff, meaning Tech companies see no change to the EU regulatory environment, AND tariff-driven inflation takes effect. This is especially troublesome because it puts the US in the unenviable position of having to save face. This generally involves walking back the ineffective policy. but the President may instead ratchet up a face-saving response rather than pursue a deescaltory one.
This policy further incentivizes other countries to find U.S.-based alternatives, incentivizing them to grow their own tech sectors or trade around the U.S. As I mentioned earlier, companies are already doing this. For a good read on the double-edged sword of US financial powers take a check out Underground Empire.
Asymmetry of capital
The President also signed another Executive Order to solve the asymmetries that open societies face. This asymmetry is capital flow; the EO tries to maintain our open society while excluding those countries (the PRC) that can exploit it.
Investment by United States allies and partners can create hundreds of thousands of jobs and significant wealth for the United States. Our Nation is committed to maintaining the strong, open investment environment that benefits our economy and our people, while enhancing our ability to protect the United States from new and evolving threats that can accompany foreign investment…
Certain foreign adversaries, including the People’s Republic of China (PRC), systematically direct and facilitate investment in United States companies and assets to obtain cutting-edge technologies, intellectual property, and leverage in strategic industries. The PRC pursues these strategies in diverse ways, both visible and concealed, and often through partner companies or investment funds in third countries.
This is a fantastic move, and I hope it is successful. Open societies should benefit open societies, and our system doesn’t have to be the same thing that dooms us. Given the recent gutting of the civil service, it will be interesting to see how successful the administration is at implementing it. Civil servants in export control are, in all effect, law enforcement officers, and we need more cops patrolling this sector. It will also be interesting to see what allies and partners will be able to invest, given the other EO.
Other trade news
Apple continues to ramp up its India production, but it is still using parts flown in from the PRC.
Meta is planning to build an undersea cable from the US to India. Control of infrastructure is another way the US can leverage its existing might to coerce countries to execute policies in the US’s interest.
C*ns*rsh*p
I will continue to beat the recommendation-algorithm-as-censorship-drum until the music changes. Generally, I believe content moderation misses the mark as a solution to anything. Instead, what we should be doing is enabling people to choose to engage with algorithmically curated feeds or not—returning the freedom and right to decide what information they wish to receive. One piece where I wrote extensively about this position was last month when the TikTok ban was in the news.
There have been plenty of censorship headlines this week:
In Germany, social media algorithms are pumping out huge amounts of far-right, pro-AfD content. “A new study found that, on TikTok and Elon Musk’s Twitter, nearly 3/4 of all partisan content being pushed algorithmically to German users” were prof-AfD.
Meta and X were both found to have increased their sales of anti-Musilm and anti-Jew ads in Germany, which is undoubtedly linked to an increase of AFD content by the companies’ algorithms.
FTC seeks public’s input on ‘un-American’ and ‘potentially illegal’ Big Tech censorship — including ‘shadow banning.’ This excerpt from the FTC’s website:
Today, the Federal Trade Commission launched a public inquiry to better understand how technology platforms deny or degrade users’ access to services based on the content of their speech or affiliations, and how this conduct may have violated the law.
In other news
Deregulating Crypto
“Coinbase, the largest US cryptocurrency exchange and one of the industry’s top political donors, on Wednesday outlined its legislative priorities after spending tens of millions of dollars that helped Republicans win control of Washington in 2024.” Semafor.
Hackers steal $1.5bn from crypto exchange Bybit in biggest-ever heist.
Nigeria’s Federal Inland Revenue Service (FIRS) is suing Binance for $79.5 billion in alleged economic losses and $2 billion in back taxes for 2022 and 2023. The lawsuit also claims Binance operated covertly in Nigeria despite its significant economic presence.” Tech Safari.
Tyranny of apps
Smartphones drive nearly every interaction we engage in. This “tyranny of apps” is excluding millions of people.
“8% of people aged 16 or over do not have a smartphone, which for the UK translates into just under 4.5 million people. Among those aged 75-plus, the proportion is said to be 28%. Add in all those who don’t or can’t use apps and the total number of people affected is a lot bigger.”
Children’s safety
“Four British parents who are suing TikTok for the alleged wrongful deaths of their children say they are “suspicious” about the social media platform’s claim to have deleted their children’s data.”
The week after the lawsuit was filed, a TikTok executive said that there were some things “we simply don’t have” because of “legal requirements around when we remove data”. Under UK GDPR rules, platforms are obliged to not keep personal data for longer than necessary…
[One parent] said that because her son, Archie Battersbee, was 12 when he died she had the automatic right to his data, because GDPR rules apply only from the age of 13, yet has still struggled to obtain it. “There’s still three [of his] accounts that are up. I can see them for myself,” she said.
Why is protecting kids online so hard? A children’s online safety bill died in the U.S. House after passing the Senate 91-to-3. Both tech companies and internet freedom groups hid behind First Amendment arguments to defeat a popular policy solution instead of having to face harmful consequences for children having unfettered access to the internet.
Lastly,
The National Institute of Standards and Technology, a successful example of public-private interactions that promote innovation, research, and standards across multiple sectors, faces large workforce cuts.
Crackdown on Power-Guzzling Data Centers May Soon Come Online in California. “A spate of new bills in California and other states would protect consumers from electricity rate hikes that subsidize data centers.”
Apple Pulls Advanced Data Protection Service in U.K. after the U.K. demanded a back door to the encrypted service.
The difference between the US exerting extraterritorial authority via tariffs and other nations regulating their sovereign territory is unclear to me.
I realize the EO isn’t EU specific, but it’s pretty clear that they will be the biggest target in the cross-hairs.